Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2017

Property Tax Annotations

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Annotation 220.0078

220.0078 Corporate Ownership. Revenue and Taxation Code section 64(b) excludes from change in ownership transfers of real property or legal entity ownership interests among members of an affiliated group. An affiliated group is one or more chains of corporations connected through stock ownership with a common parent corporation where both of the following are met: (1) one hundred percent of the voting stock of each of the corporation is owned by one or more of the other corporations; and (2) the common parent corporations owns directly 100 percent of the voting stock of at least one of the other corporations.

The California Court of Appeal has held that "members of an affiliated group" means affiliation from the beginning of the transaction until the end of the transaction and that the affiliation cannot be just one step in the reorganization. Thus, this requires common parent corporate ownership of all parties to the reorganization both before and after the reorganization. As part of the reorganization, the transfer of real property to a newly formed subsidiary is excluded from change in ownership under Revenue and Taxation Code section 62(a)(2). It is not excluded as an affiliated group under section 64(b) because the newly created subsidiary was not part of the affiliated group prior to the reorganization. C 4/4/2008.